SNDL Expands Cannabis Retail Network by Acquiring 32 Stores from 1CM

In a significant development within the Canadian cannabis retail landscape, SNDL Inc. (Nasdaq: SNDL) has announced its agreement to purchase 32 cannabis retail locations from 1CM Inc. (CSE: EPIC). The stores, which will operate under the established Cost Cannabis and T Cannabis banners, are spread across the provinces of Ontario, Alberta, and Saskatchewan. This strategic move not only broadens SNDL’s retail reach but is set to reinforce its leadership position in the burgeoning cannabis market.

Financial Aspects of the Acquisition

The acquisition, valued at approximately CAD 32.2 million, will be undertaken in cash with the option for SNDL to assign certain assets. This aligns with SNDL’s objectives to expand its growing cannabis retail portfolio. The 1CM Stores have demonstrated solid performance, generating collective revenues of CAD 53 million over the fiscal year that ended on August 31, 2024, amounting to 30 active locations. This acquisition brings SNDL’s total owned and franchised cannabis retail stores to 219, highlighting the company's aggressive expansion strategy.

Executive Statements

Zach George, the CEO of SNDL, expressed his optimism about the deal, stating, "We are excited to expand SNDL's retail network and reinforce our leadership in Canada. The addition of these locations will increase SNDL's exposure to a broad consumer base in key Canadian markets and aligns with our stated capital priorities as we build a sustainable cannabis retail portfolio at scale."

In parallel, Tanvi Bhandari, the CEO of 1CM, mentioned that the acquisition unlocks considerable shareholder value and expressed hope about easing the transition for SNDL, reflecting a collaborative spirit during this significant change.

Board Recommendations and Voting Agreements

The board of directors at 1CM unanimously approved the agreement, indicating their belief that this transaction serves the best interest of their shareholders. They are encouraging shareholders to back the deal at the upcoming special meeting. Directors and senior officers at 1CM, who collectively own about 12.9% of the outstanding shares, have signed voting support agreements to ensure their votes reflect favorably on the transaction.

Conditions for Completion

The acquisition will proceed according to an arrangement under the Business Corporations Act (Ontario). It includes typical provisions regarding non-solicitation, with allowances for 1CM to explore superior deals, should they arise. However, SNDL's commitment to this acquisition is bolstered by their financial stability, as the transaction carries no financing conditions and is expected to conclude by the end of Q3 2025, pending regulatory approvals, court endorsement, and shareholder consent.

Future Prospects

Once finalized, 1CM plans to distribute a significant portion of the sale proceeds back to its shareholders while also investing in new store developments and general corporate objectives. This transaction marks a pivotal moment for both companies, with the potential to reshape the cannabis retail landscape in Canada.

About SNDL Inc.

SNDL Inc. operates as one of Canada’s largest vertically integrated cannabis companies, boasting a robust retail presence with various brands including Ace Liquor, Wine and Beyond, and Value Buds. It continues to drive its growth strategy through direct investments and partnerships nationwide.

About 1CM Inc.

1CM Inc. is notable for its successful cannabis and liquor retailing strategies. The company has a robust record of developing profitable locations and is eager to expand through both organic growth and strategic acquisitions.

This latest acquisition is prime evidence of an evolving cannabis market in Canada, propelling SNDL and 1CM into new futures filled with promise and expansion.